AT&T takeover of Time Warner at risk after DoJ files lawsuit

Business - 21 Nov 2017

Author: Callum Murray

A planned takeover of Time Warner, the US media giant that
owns TV networks including HBO and CNN, by telecoms giant AT&T is at risk
after the US Department of Justice filed a lawsuit claiming that the merger,
one of the largest media deals ever announced, would reduce competition and
lead to higher consumer prices.

The move comes amid reports of possible political interference after Donald Trump, the US president who has been a critic of CNN, objected to the deal during the presidential campaign last year, saying that it would not be approved “in my administration because it's too much concentration of power in the hands of too few.”

The DoJ has claimed that the deal, valued at over $85 billion, would harm US consumers, saying: “It would mean higher monthly television bills and fewer of the new, emerging innovative options that consumers are beginning to enjoy.”

However, AT&T called the lawsuit “a radical and inexplicable departure from decades of antitrust precedent,” with David McAtee, its general counsel, adding: “Vertical mergers like this one are routinely approved because they benefit consumers without removing any competitor from the market. We see no legitimate reason for our merger to be treated differently.”

If approved, AT&T would add Time Warner’s premium content, including live sport, to its distribution network of 130 million mobile phone customers and 25 million pay-television subscribers.

Time Warner’s assets include television channel TNT, which holds live rights to the National Basketball Association until the end of the 2024-25 season, TBS, which shows Major League Baseball games in a deal running to 2021, and HBO, which offers pay-per-view boxing.

In addition, Time Warner subsidiary Turner Sports owns
Bleacher Report, the sports news portal which operates the official websites of
the NBA, the PGA of America and the National Collegiate Athletic Association.

In 2015, AT&T paid $48.5 billion to acquire DirecTV, the
satellite television broadcaster, which owns the Sunday Ticket package of
rights to NFL American football games in a deal worth $12 billion over eight
years.